Diversification rules as UK and German funds attract inflows

The euro may be beleaguered. Problems may be brewing in the USA. But fund flow statistics released today by the German and UK fund associations, the BVI and IMA, covering November 2010 provide some reasons to be cheerful as the New Year gets into full swing.

German investment funds attracted net inflows of €8.7bn in November last year, according to the BVI. This was less than the previous month (€9.7bn) and less than November 2009 (€9.6bn), but it was a positive number that contributed to considerably rosier year-to-date figures for 2010 than the German fund industry has seen for a while.

Overall, German investment funds pulled in net flows of €80.9bn between January and November 2010, compared with €43.6bn during the same period in 2009 and a deficit of -€18.5bn in 2008. According to the BVI, the January to November 2010 net inflows to German investment were also about the average figure in 2000-2009 of €63.3bn.

A large part of these flows were attributable to institutional investors allocating money to  Spezialfonds, a vehicle specifically designed for the institutional market. For the period January to November 2010, Spezialfonds attracted net inflows of €61.1bn, while the figure for retail funds was €22.6bn.

The UK was also in positive territory in November 2010, though the British showed a less spectacular improvement than the Germans. UK net sales (retail only) in November 2010 totalled £1.4bn (€1.7bn) – below the monthly average of £2bn (€2.4bn) seen over the past 12 months.   For the period January to November 2010, net sales were £21.4bn (€25.3bn) compared with £23.7bn (€26.1bn) the previous year, when January to November sales reached a record amount.

In terms of investment choices, net sales of commodity funds reached £208m in the UK in November 2010 – the highest level on on record – while the global emerging markets sector was the best selling sector for the second month running.

“Investors continue to seek diversification,” said Richard Saunders, chief executive of the IMA. “In November there was continued appetite for funds with a global scope, and commodity funds also experienced their highest ever inflows. But all the main asset classes have been popular in 2010, during which investors have consistently added to their portfolios.”

In Germany, meanwhile, equity fund investors showed a preference for German equity funds in November 2010, though the clear year-to-date equity favourite was global funds. Over the 11 months to November 2010 bond funds outstripped equity funds in terms of net sales by €11.5bn to €8.8bn. However, in November 2010 this trend was reversed with equity funds attracting net inflows of €2.5bn, while bond funds net redemptions of -€892.5m.

Fiona Rintoul. editorial director
©2011 funds europe



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